Justia Insurance Law Opinion Summaries

Petitioners sought underinsured motorist coverage (UIM) under a policy issued by Auto-Owners Insurance Company (Owners) as a result of an automobile accident caused by an allegedly negligent driver of a rental vehicle owned by Avis Rent-a-Car (Avis). Avis, as a car rental company, was statutorily required to pay $50,000 as a result of the accident. Owners denied Petitioners' UIM claim, asserting that because Avis was a self-insurer, the rental vehicle was not an underinsured automobile under the terms of the policy. The circuit court ruled in favor of Owners, determining that Avis was unambiguously a self-insurer, and therefore, the Avis vehicle did not fall within the policy definition of underinsured automobile. The court of appeals affirmed. The Supreme Court reversed, holding (1) as applied, the policy term "self-insurer" is ambiguous, and therefore, the policy is interpreted in favor of Petitioners to afford coverage; and (2) even if the term "self-insurer" appears to be unambiguous, interpreting it to exclude self-insured rental vehicles from coverage leads to an absurd result here. Remanded. View "Bethke v. Auto-Owners Ins. Co." on Justia Law

The two plaintiffs in this case, Wisconsin Public Service Corporation (WPSC) and Associated Electric & Gas Insurance Services Limited (AEGIS), brought suit against the defendant, Arby Construction, Inc. (Arby), for indemnification of the damages that the plaintiffs paid in the settlement of a tort suit in federal court. The circuit court dismissed the AEGIS claim against Arby on the basis of claim preclusion. At issue on appeal was whether AEGIS raised, in the form of an affirmative defense, a cross-claim against Arby in the prior federal action and was therefore precluded from pursuing the same claim in this action because the claim was adjudicated in the federal judgment of dismissal. The Supreme Court affirmed the court of appeals, which affirmed the circuit court, holding that AEGIS's claim was raised, in substance, in the prior federal action and was decided. Therefore, the claim was subject to claim preclusion and was properly dismissed by the circuit court. View "Wis. Pub. Serv. Corp. v. Arby Constr., Inc." on Justia Law

In this case the Supreme Court was asked to decide whether a charitable hospital may pursue payment for medical care provided to a Medicaid-eligible patient by filing a lien against a settlement between the patient and an insurance company covering the liability of a tortfeasor responsible for the patient's injuries. To answer the question, the Court balanced the complex state and federal legal framework surrounding Medicaid with Wis. Stat. 779.80 (hospital lien statute). The Court concluded that the soundest harmonization of the two permitted the liens at issue here. In so doing, the Court reversed the court of appeals, which reversed the circuit court's reasoning that the hospital was authorized to either file the liens or bill Medicaid. View "Gister v. Am. Family Mut. Ins. Co." on Justia Law

This case arose from a fatal motorcycle accident in which Steven Wadzinski was struck and killed by an uninsured motorist. Steven's wife, Michelle, sought uninsured motorist (UM) coverage under an umbrella insurance policy that Steven's company carried on him at the time of his death. At issue was the meaning of an endorsement to the executive umbrella policy, and whether that endorsement caused contextual ambiguity such that a reasonable insured would expect $2,000,000 of UM coverage under the policy. The circuit court held that the executive umbrella policy was clearly intended to provide only third-party liability coverage and granted summary judgment in favor of Auto-Owners Insurance Company. The court of appeals reversed, concluding that the executive umbrella policy was contextually ambiguous, and therefore, the policy should be construed in favor of the insured to afford coverage. The Supreme Court reversed, concluding that the policy at issue unambiguously did not afford first-party UM coverage, and therefore, the circuit court's summary judgment in favor of Auto-Owners was proper. View "Wadzinski v. Auto-Owners Ins. Co." on Justia Law

The circuit court granted summary judgment to Community Insurance Corporation (CIC) on a claim by the Hartford Union High School Board of Education and the Hartford Union High School District (collectively, the District) that insurance coverage had been created by virtue of CIC's failure to issue a reservation of rights letter during its unsuccessful defense of the District in a contract lawsuit. The court of appeals reversed, holding that CIC was estopped from denying coverage because the District relied on CIC's defense to its detriment and was prejudiced thereby. The Supreme Court reversed, holding that the failure to issue a reservation of rights letter cannot be used to defeat, by waiver or estoppel, a coverage clause in an insurance contract that would otherwise justify the insurer's denial of coverage.

Robert Johnson filed a summons and complaint against Cintas Corporation, alleging he had automobile liability insurance coverage through Cintas. Johnson subsequently served his summons and complaint upon the registered agent for Cintas Corporation No. 2, a wholly owned subsidiary of Cintas. Johnson then amended his summons and complaint to name Cintas No. 2 as the correct defendant. The circuit court granted default judgment against Cintas No. 2 and denied that Cintas No. 2 was entitled to notice of the amended summons and complaint. The court of appeals reversed, holding that because Johnson's summons and complaint did not name Cintas No. 2 as a defendant, the circuit court lacked personal jurisdiction over Cintas No. 2, and therefore, the default judgment was void. The Supreme Court affirmed, holding that service in this case was fundamentally defective because Johnson failed to name Cintas No. 2 as a defendant in his summons and complaint, and therefore, the circuit court lacked personal jurisdiction over Cintas No. 2, regardless of the manner in which Cintas No. 2 held itself out to the public or to Johnson specifically.

After Employer and Employee settled a suit Employee brought against Employer, Employer's Insurer paid the policy's maximum of $2 million pursuant to an oral funding agreement. Insurer then filed an action against Employer, seeking a declaration that its policies provided no coverage for Employee's claim and reimbursement of the $2 million. The circuit court granted summary judgment in favor of Employer on March 26, but the parties agreed to delay entry of a final judgment. On July 8, the circuit court entered a final judgment. Insurer appealed on August 12. The court of appeals dismissed the appeal as untimely, concluding that the circuit court's March 26 decision and order was the final order for purposes of appeal. The Supreme Court reversed, holding (1) Insurer's appeal was timely because although the March 26 order arguably disposed of the entire matter in litigation between the parties, it did not unambiguously do so, and therefore, the July 8 judgment was final for purposes of appeal; (2) the funding agreement was an enforceable contract; (3) under these circumstances, an insurer cannot recover payments based on an unjust enrichment theory; and (4) Insurer's asserted mistake of fact did not provide grounds for voiding the contract.

This case required the Supreme Court to answer a threshold question concerning whether an appeal in this insurance company rehabilitation case could go forward. The court of appeals granted the motion of the Office of the Commissioner of Insurance to dismiss the appeal by the United States. The Commissioner had argued that the appeal should be dismissed either on the grounds that the notice of appeal was fundamentally defective such that the court of appeals had no jurisdiction or on the grounds that the United States had waived its right to appeal issues by failing to appear in the circuit court. The court of appeals concluded that the notice of appeal did not include a signature of an "attorney of record" as Wis. Stat. 802.05 required and dismissed on jurisdictional grounds without deciding the waiver issue. The Supreme Court affirmed on the basis of waiver, holding that the U.S.'s failure to litigate any issues involved in the circuit court precluded the U.S. from pursuing relief in the court of appeals.

Insured, who was injured, submitted a claim to Insurer under her underinsured motorist (UIM) coverage after exhausting the policy limits of the underinsured motorist. An arbitration panel concluded that the court of appeals decision in Heritage Mutual v. Graser precluded Insured from recovering under her UIM coverage the value of medical expenses that were written off by her medical provider. The circuit court modified the arbitration award to include the reasonable value of the written-off medical expenses. The Supreme Court affirmed, holding that the arbitration panel's decision in this case was properly modified by the circuit court because the arbitrators exceeded their authority by failing to fully review the Court's decisions on the collateral source rule and the law of damages. The Court overruled Graser to the extent that it held that the collateral source rule had no application in cases involving UIM coverage, because according to precedent, an injured party is entitled to recover the reasonable value of medical services, which, under the operation of the collateral source rule, includes written-off medical expenses.

Joel and Evelyn Hirschhorn filed suit against their homeowners insurer, Auto-Owners Insurance Company, for breach of contract and bad faith, claiming that Auto-Owners was liable for the total loss of their vacation home. The Hirschhorns alleged that their vacation home became uninhabitable and unsaleable as a result of the accumulation of bat guano between the home's siding and walls. The circuit court granted summary judgment in favor of Auto-Owners, concluding that Auto-Owners' insurance policy's pollution exclusion clause excluded coverage for the Hirschhorns' loss. The court of appeals reversed, concluding that the pollution exclusion clause was ambiguous and therefore must be construed in favor of coverage. The Supreme Court reversed, holding that the circuit court properly dismissed the Hirschhorns' complaint against Auto-Owners, as the pollution exclusion clause excluded coverage for the loss of the Hirschhorns' home that allegedly resulted from the accumulation of bat guano.